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PATRIOT Act clouds picture for tech

“It’s not at this point, I think, entirely clear that governments are doing this. But it is clear that for competitive purposes, this sort of thing is being raised,” Verveer said. “It’s definitely a genuine issue.”

Now, Washington-based tech trade groups are increasingly hearing from their members that foreign governments engaging in cloud contract discussions are raising questions about data moving outside their respective borders.

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And the concerns are not isolated to Europe.

In the Asia-Pacific region, where cloud computing is experiencing a boom similar to the U.S., tech industry observers are also seeing the same issues pop up during government cloud contract negotiations, said Mark MacCarthy, vice president for public policy at the Software and Information Industry Association.

Some of that tension in the region could be alleviated as the result of recent trade discussions.

Obama earlier this month laid the foundation for an agreement with eight Pacific nations to drop trade barriers. That deal, which is still being negotiated, included provisions to the bar requirements for local data centers as well as cross-border data flow restrictions.

“It would be dramatically helpful for the cloud industry,” MacCarthy said. “That can then become the precedent for future trade agreements, and it might be the basis for further action with the [World Trade Organization].”

The PATRIOT Act argument has implications that extend to any U.S. company peddling in data that travels across the world.

But it’s an especially acute concern for cloud firms, experts say, because the whole business model is predicated on the ability of data to travel freely. Foreign countries are now asking cloud firms to restrict data flow within their respective borders.

“There’s a feeling that there’s a risk we’ll end up with a Tower of Babel with cloud computing,” said Darrell West, founding director of the Center for Technology Innovation at the Brookings Institution. “Several nations are imposing restrictions on data sharing to prevent data from moving across their own national boundaries, and that’s very shortsighted. You end up losing much of the benefit of cloud computing if you end with 192 systems.”

Aside from data restrictions, foreign governments are also asking U.S. cloud firms to establish data centers in their respective countries to keep a better eye on where data is being stored, creating another potential roadblock for international cloud contracts.

The need for the Obama administration to take an international lead on the issue was highlighted in a cloud computing report this summer authored by a coalition of 71 experts from some of the largest hardware, software and Internet companies, including Microsoft, Amazon and Salesforce.

Aside from reforming antiquated U.S. digital privacy laws, the report urged the Commerce Department to conduct a study of the PATRIOT Act and national security laws in other countries to determine a company’s ability to deploy cloud computing services in the global marketplace.

Readers' Comments (5)

Well I certainly don't want the US government rifling through my "data"...which, as an average amounts to MP3's and stored copies of pictures that I got FROM the internet anyway.

Could it be that people just aren't embracing "cloud computing" because it's not offering any real value for consumers? Compared to a 1TB hard drive at $300, $24.95 per month to have my data stored for me, plus the inconvenience of having to be connected to the "cloud" in the first place, wait times to access the data, unreliability of the servers the cloud is relying on...why would I put anything in "the cloud" to begin with?

I get FREE cloud storage from Amazon and I still don't, and never will, use it...and it has nothing to do with the patriot act. It's simply an inferior storage option.

Your comment is on the cloud and most likely all records of your utility bills, health insurance, browsing history, and financial transactions whether you authorized it or not. Also, some math geek is sitting in a room somewhere trying to figure out how to take all of these disparate bits of information about you to see if he can create a profile of a terrorist or criminal from it.

Oh yes, the geek, who got an MS in mathematics from one of those "elite" ivy league schools is being payed with your tax money. He doesn't thank you.

Under the guise of fighting terrorism, the Patriot Act was adopted WITHOUT public approval or vote just weeks after the events of 9/11. Such an unconstitutional set of laws should be abolished seeing as they violate human rights and due process. A mere 3 criminal charges of terrorism a year attributed to this act, which is mainly used for no-knock raids leading to drug-related arrests without proper cause for search and seizure. The laws are simply a means to spy on our own citizens and to detain and torture dissidents without trial or a right to council. You can read much more about living in this Orwellian society of fear and see my visual response to these measures on my artist’s blog at http://dregstudiosart.blogspot...

I am the founder of Cloud Computing site Compare the Cloud. Sitting in the middle of the UK and EMEA cloud industry i have to say i totally concur with your comments about cloud providers using the patriot act to stifle US based competition.

I found your article after doing some research to get a balanced view and have to say the points you raised i will personally attest to the accuracy. Here is an article on my own website blog as an example www.comparethecloud.net/1249/big-brother-in-the-cloud/

I do feel that there is a lot of scaremongering going on without any fact being added to the argument. Congratulations on a well thought out well written balanced article.

So, U.S. companies are crying that other governments don't want their data stored in the U.S. Guess what? The U.S. has laws preventing certain data from being sent outside the country, too. One major such law is ITAR. I work at a U.S. research university. Much of our email has been moved into the cloud. However, neither of the major players in cloud-based email (Google and Microsoft) are ITAR compliant because data can end up outside the U.S. If the U.S. is claiming that other countries are doing something unethical, the government needs to step back and check our own laws.